Prime Time for PRM

After a long period in which there seemed to be little to report, PRM or partner relationship management,
appears to be enjoying an upswing. PRM was an unfortunate fellow
traveler with all the other ‘RM’ permutations that came about in the
dot-com bubble. There was also eCRM, which was a distinction without a
difference, and ERM in which the ‘e’ stood for employees. That idea has
suffered much the same fate as PRM — not totally forgotten but
decidedly a backwater compared to CRM.

It may simply be that once a lot of people figured out how much work
it took to implement and use CRM, many enterprises figured one ‘RM’
(real mess?) was enough to have on the plate at a time. At any rate, as
CRM has settled into a more predictable business, PRM is again bubbling
to the surface, but that explanation is too simple to account for all
things PRM these days.

Channeling Success

A better set of explanations can be found in supply and demand. For example, for some time, the amount of technology products sold through the channel and channel partners has been steadily increasing to the point that people at BlueRoads, for instance, tell me that more technology products get sold through the channel today than through the direct sales force.

What’s happening? Well, to a degree this is a predictable part of the
technology lifecycle. As product categories mature, much of the mystery
goes out of them because the consumer becomes acquainted with a product
type’s purpose, performance and features, so there is less need for
sales forces to perform missionary selling. At that point, producers,
or OEMs, become obsessed with lowering costs to effectively compete
with other vendors doing the same.

One of the major sources of cost in any product is labor. By
selling product through a channel, a vendor may give up some margin to
make room for the reseller, but to a great degree, the vendor
effectively gets out of the variable compensation business and pays
only for successful conclusion of a deal.

The Retail Route

Another approach, which is largely driven by the type of product and
its complexity, is to simply go retail. The retail approach is
appropriate for consumer goods like personal electronics and routers
for the home, but often as products are downshifted from a captive and
highly trained sales force it is difficult to make a direct transition
to the store shelf, hence the need for the partner channel. This wisdom
is reflected in the indirect channels strategies that companies like Cisco use, and is confronted by the recent announcement by NetSuite to offer its product on the shelves of CompUSA.

I am betting on NetSuite to succeed in this effort, by the way, but
for different reasons. The path has largely been paved already for
NetSuite by many generations of business software sold at retail that do some of the same things, such as accounting,
that NetSuite does, but it’s still a wait-and-see situation.

To net out the last few paragraphs, there is more structural need in
the market for PRM today than in previous years, and the vendor
community is responding by supplying more product to meet the demand.
The demand and supply was most recently reflected by Salesforce.com’s entry into the category with its usual twist on things by offering its
solution on-demand. It’s hard to argue with the logic of on-demand PRM,
especially when it comes from a vendor of on-demand CRM.

Two-Way Street

On-demand CRM has been a grassroots phenomenon in which small
companies bought a few seats of CRM to manage their small businesses.
What may not have been apparent to many people is that a lot of small
companies are resellers of OEM products. With a large deployment in
small companies, introducing an on-demand way for the OEMs to manage
their resellers was a no-brainer.

Nevertheless, PRM is more than simply CRM on steroids managing
partners instead of end customers. A good PRM package must be able to
work in both directions — from the OEM to the partner, and, just as
important, from the partner back. Where it gets tricky is that the
pipelines going in each direction carry different things.

The most important thing an OEM can get back from a partner, aside
from a signed contract, is information. That information can include
how long it takes to work a lead, results of marketing programs that
the OEM at least partially bankrolls, or accurate forecasts of the book
of business. On the other hand, partners like to get leads and
marketing funds, and they are reluctant to share deal information for
fear of having the information fall into the hands of another reseller
in the same market.

Conventional PRM did a great job for some of the needs at the
interface between the parties, such as lead sharing, and less well at
providing visibility into the things individual sales representatives
are working on. Part of the reason for the resurgence of PRM lies in
the fact that companies like BlueRoads and now Salesforce.com have
identified ways to enable OEMs to gain more visibility into the
activities of the sales representatives, thus improving the information
flow back to the OEM. Considering the fact that PRM is usually paid for
by the OEM, visibility has given OEMs a reason to care about PRM again.

So, to net it all out, the resurgence of PRM appears to me to be a
sign of the times. Markets and customers are changing and vendors are
adjusting the way they sell to accommodate shifting demand. Smart
vendors of PRM solutions saw this shift coming several years ago and
began adjusting their products or started developing from scratch. As
usual, it is the forward-looking front office vendors that are reaping
the biggest rewards. The laggards will have no choice but to spend
money to catch up, and it is doubtful that all of them will recoup
their investments.